Generally,
Golden age is a period in where most of the people in some part of
the world experienced a stage of prosperity, happiness, peace and
stability. However, European countries are the one that significantly
influenced by this period. These countries include Greece and Rome.
This period happened before the first World War. One of the main
reason why it is called as Golden Age is because at that time, the
economic system used gold as their international currency. In other
words, the gold standard was being applied.
In
this period, the overall economic condition was stable and good. The
implementation of gold standard made all the international
transactions went smoothly because the gold standard created fixed
international exchange rates between countries and thus it will
reduced uncertainty in international trade transactions.
Additionally, International trade was really encourage at this time
because there were less restrictions of trade such as tariff, quotas and other
complex regulations. Due to the less restrictive international
trade activities, export and import between countries ran smoothly
and therefore the total production and consumption also
increased and it leads to higher economic growth -according to Gross
Domestic Product (GDP) indicator-. When the rate is fixed, the price
stability is also maintained and there would be less probability of
significant inflation.
Another
supporting factor of the world economy's growth in this period is the
advanced of technology, communication and transportation, which make the international transactions becoming easier. With technology like
machinery, the production of output was greatly increase. The
improvement in accessibility could also attract the foreign investor
to invest. As a result there will be an increase value of foreign
investment and perhaps the domestic investment as well. Therefore,
with the increased in productivity and investment, the profit-making of the economy is also better.
Overall, in my opinion, The Golden Age brings positive impacts to the world economy because it uses gold standard which make every domestic and international transactions of a country becoming so easy and effective. In general, the world economic condition is at its highest level because there are less economic problem and good economic stability. As mentioned before, The fixed exchange rate, The increased in international trade activities, Price stability and High economic growth obviously portrayed that The Golden age mostly give a positive impacts to the world economy.
By : Dania S. Hardiani Hamdan (1701359884)
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